Legacy issues still a concern for highway sector

The road transport ministry submitted these details to Parliament early this month. In a written response in Lok Sabha, highways minister Nitin Gadkari said projects running behind schedule were spread across states and under every road development programnme of the governmentDipak K Dash | TNN | December 28, 2015, 17:30 IST

NEW DELHI: Delay in completion of highway projects remains a cause of concern for the NDA government despite its success in increasing award of more works, improving daily construction and resolving sticky issues. According to government data, 365 projects were running behind schedule till November 30 and work on another 34 stretches involving at least Rs 38,300 crore was either moving slowly or had stopped because of financing issues.

Work on most of these projects had started during the UPA government.

The road transport ministry submitted these details to Parliament early this month. In a written response in Lok Sabha, highways minister Nitin Gadkari said projects running behind schedule were spread across states and under every road development programnme of the government.

NHAI, which is largely responsible for managing the flagship programme of NHDP, has reported delays in 98 projects. Similarly, 43 works awarded under the programme to improve connectivity in left wing extremism (LWE) affected areas were running behind schedule and another 38 projects in the north-east under the SARDP-NE scheme were delayed.

As per the data, 29 projects undertaken by the Border Roads Organization (BRO) were also delayed.

Gadkari has said projects were caught in delays due to past faults of government agencies and private developers as well. For example, in several cases, projects were rolled out with less than 50% land availability and without getting necessary statutory clearances. Developers also signed agreements knowing well they wouldn’t be able to carry out work.

“Even banks happily released funds without doing groundwork to securitize their loan and also without doing due diligence whether the developers are in a position to put their equity,” said a road transport ministry official.

In fact, how poor financial health of developers has caused huge damage to the sector is evident from Gadkari’s written reply to another question. The minister said projects totaling over Rs 38,300 crore were stalled “exclusively for inadequate liquidity of funds”. These are all projects on public-private partnership mode and banks have lent huge amounts. Going by the thumb rule of equity and loan ratio for road projects, the banks may have lent around Rs 27,000 crore.

Last week, TOI had reported how NHAI even suspects diversion of funds by private developers and banks staring at a bigger crisis ahead.

Meanwhile, in recent months, the government has taken several decisions to revive stalled projects. Officials claim the effect of such decisions will be visible in the near future.